December 15, 2022
By Murtuza Merchant
Because of the connections between Solana and FTX, the FTX collapse affected the entire crypto ecosystem, but it may have had a particularly significant influence on Web3 gaming.
While some say GameFi depends on centralization to draw Web2 gamers, others predict the collapse will draw greater attention to decentralized ventures.
To discuss the effects of the FTX collapse on Web3 Gaming, Tegro Earn organized a Twitter Space on November 24 with participation from Footprint Analytics, Tegro Earn, KCC Games Guild, and Earn Alliance.
Here are the main conclusions.
In the broadest sense, what does this mean?
More market participants and investors are beginning to lose faith in centralized crypto companies.
People have had to reconsider how they keep and stake their tokens after the collapse of an exchange that had appeared to be reliable and successful and had strong linkages to the GameFi ecosystem and important blockchains and marketplaces.
Web3 initiatives will lose out on financing chances in the near future, but this will gradually alter because funding houses still have funds available for deployment.
Tegro’s founder, Siddharth Menon, stated: “There’s a setback; there’s an entire trust issue. It comes back to why in the first place, Bitcoin was born. We don’t trust centralized entities. It’s not like people have lost faith in crypto in general.”
“A lot of projects will lose the chance of funding, especially small games that got the funding through Web3. On one side, we’re going to see a lot of scams disappearing, but we’re losing a lot of great potentials,” said Earn Alliance.
Will the number of decentralized initiatives grow as a result?
Decentralizing the banking system was the original goal of Bitcoin and the crypto sector, which later spread to the gaming and other sectors.
However, due to the simplicity of use they offer, many centralized businesses prosper in the ecosystem.
Centralized systems are more effective at luring and keeping mainstream consumers in the crypto space, but they are fundamentally riskier than decentralized alternatives.
“Since everybody is taking their money off of centralized exchanges and now centralized exchanges can’t be trusted, are people going to start storing and staking their tokens on DeFi projects? Are we going to see another wave of DeFi protocols, especially for gaming?” asked Alex Cooper, Community Manager at Footprint Analytics.
Most games are trying to get players from Web2, and the easiest way to do that is just giving them easy access, according to Juan Jose Martinez, Community Manager at Earn Alliance.
In one side, games will become centralized, and on another, we’re going to see a rise of decentralized games, but for people who are already in the ecosystem, he adds.
What impact did this have on the current GameFi protocols?
GameFi standards have remained largely constant over the past few months despite the downturn market.
But the demise of FTX and its impact on Solana and the larger crypto market will certainly result in a reduction in participants and investors.
The cost of NFTs and tokens also decreased, lowering players’ anticipated earnings.
There are 20 to 25 projects that were actually supported by FTX Ventures or Alameda Research, according to Kyle from KCC Games Guild.
With this kind of backup, you really have the chance to get listed on FTX. With the collapse of FTX, they lose this advantage as well, so they have to seek funding from elsewhere, Kyle adds.
About the author
Murtuza Merchant is a senior journalist and an avid follower of blockchain and cryptocurrencies.